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What’s happening: Shares of Eli Lilly and Company jumped on Tuesday, after the company released results for its second quarter.
What happened: The US company reported stronger-than-expected quarterly results, driven by demand for new diabetes drug Mounjaro.
Eli Lilly also raised its annual guidance, sending the company’s shares to a record high on Tuesday.
How were the results: The weight loss drugmaker reported double-digit growth in sales for the second quarter, which also exceeded market estimates.
Why it matters: Eli Lilly’s stock started to rally even before the release of quarterly results amid high expectations for Mounjaro’s use as a weight-loss treatment and the company’s experimental drug Donanemab for Alzheimer’s.
The Food and Drug Administration is projected to announce its decision later this year on the usage of Mounjaro to treat obesity.
The company said new products contributed sales of $1 billion in the second quarter, driven by its diabetes drug Mounjaro, which contributed $979.7 million in revenues during the quarter, up significantly from $16 million in the year-ago period.
Sales of its diabetes drug Jardiance climbed 45% to $668.3 million last quarter, while revenues from Growth Products rose 16% to $4.93 billion in the second quarter.
Investors also cheered news of the company’s peer Novo Nordisk saying its obesity drug Wegovy lowered the risk of a major cardiovascular event like stroke by 20% in a closely watched SELECT cardiovascular outcomes study.
Management raised their guidance for annual revenues from $31.2-$31.7 billion to $33.4-$33.9 billion. The projection for adjusted earnings was also raised from $8.65-$8.85 per share to $9.70-$9.90 per share.
How shares responded: Eli Lilly’s shares jumped 14.9% to close at $521.60 on Tuesday, following the release of quarterly results. The stock has added around 53% over the past six months.
What to watch: Traders will watch the FDA’s decision on the use of Mounjaro in obesity patients, which could provide a strong boost to the company’s overall results ahead.
Context: The US dollar strengthened on Tuesday, following disappointing trade data from China.
Details: Data released on Tuesday showed China’s July imports and exports declining much faster than projected. Imports to China contracted by 12.4% year-over-year to $201.16 billion in July, compared to market expectations of a 5.0% decline and following a 6.8% decline in the previous month.
Exports from China dipped 14.5% year-over-year to a five-month low of $281.76 billion in July. This was the steepest contraction since February 2020 and followed a 12.4% decline in the prior month. The figure was also much worse than market expectations of a 12.5% decline.
China’s trade surplus narrowed to $80.6 billion in July, from $102.7 billion in the year-ago period, raising concerns around the country’s economic rebound. Yuan tumbled to a five-week low against the US dollar on Tuesday. The AUD/USD forex pair also declined to its weakest since June 1, since China is Australia’s largest trade partner.
The USD/JPY pair climbed on Tuesday, after data showed Japanese real wages declining for the 15th consecutive month in June.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.5% to close at 102.53 on Tuesday. With the uptrend on Tuesday, the US dollar moving further away from the one-week low recorded on Friday following mixed US jobs data.
What are expectations: Traders await consumer inflation rate data from the US on Thursday and PPI data on Friday. The annual inflation rate in the US, which slowed to 3% in June, is expected to accelerate again to 3.1% in July. Annual producer inflation, which eased to 0.1% in June, is projected to accelerate to 0.7% in July.
Other Markets: European indices closed lower on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.36%, 1.10%, 0.69% and 0.23%, respectively.
Poland’s defence ministry agreed to send additional troops to the border with Belarus. The news sent the safe-haven US dollar index slightly lower this morning.
China’s consumer prices declined by 0.3% year-over-year in July. This being the first decline in consumer prices since February 2021 lent support to the CNY/USD forex pair.
The Philippines said its unemployment rate fell to 4.5% in June, from 6.0% in the year-ago month, which sent the PHP/USD pair higher in forex trading this morning.
South Korea’s unemployment rate rose to 2.8% in July, from 2.6% in the prior month. The figure also came above market estimates of 2.5%, exerting pressure on the KRW/USD forex pair.
Colombia’s annual inflation rate eased for the fourth straight month to 11.78% in July, from the prior month’s reading of 12.13%, which sent the COP/USD pair slightly higher in forex trading this morning.
Japan’s machine tool orders, India’s money supply M3, Brazil’s retail sales, Mexico’s inflation rate, Canada’s value of building permits, US MBA mortgage applications, crude oil inventories, gasoline stocks change, distillate stocks, Russia’s inflation rate, Spain’s consumer confidence, as well as Argentina’s industrial production.
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